When Brad Feld moved to Boulder, Colorado, in 1995, he found a college town that was best known for its rock-climbing and meditation centers. Using a pile of cash from two acquisitions, Feld pioneered a thriving startup scene that now includes 171 fledgling companies (and a city campaign that proclaims “Boulder is for startups”).

When Brad Feld moved to Boulder, Colorado, in 1995, he found a college town that was best known for its rock-climbing and meditation centers. Using a pile of cash from two acquisitions, Feld pioneered a thriving startup scene that now includes 171 fledgling companies (and a city campaign that proclaims “Boulder is for startups”). The Foundry Group, the venture firm that Feld founded, reigns as Boulder’s biggest software and Internet venture capital firm, having fostered entrepreneurial growth through organizations like the incubator TechStars, and investments in local companies including Social Thing and Lijit.

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Boulder’s current entrepreneurial ecosystem boasts relocated second- and third-generation entrepreneurs like Kimbal Musk, who with his brother Elon (now of Tesla), started and sold Zip2 and PayPal, and now runs real-time search engine OneRiot. And a few startup junkies like the 25-year-old Andrew Hyde, who has launched four companies, including workshop outfit Startup Weekend, which has toured 52 cities around the world. One of Boulder’s most recent entrepreneur transplants, Joe Stump, left a prestigious position at Digg to launch software firm SimpleGeo in Boulder. Colorado-born tech firm MX Logic, which helped build an Internet-era talent base with its email services business, sold this year to McAfee for $140 million. And one of Feld’s investments, Service Metrix, sold for $280 million in 1999, giving Boulder one of its biggest exits.

Feld spoke recently with FastCompany.com about what makes Boulder’s startup scene unique. What did we unearth? Boulder, CO is a small, highly networked city inhabited by active life-styled, serial entrepreneurs. Brad Feld lays out, in great detail, an entrepreneurial ecosystem that may have the right mix ingredients to be a startup capital.

How would you describe Boulder’s startup scene?

I moved here 15 years ago from Boston, and when I moved here I didn’t know anybody, which is a useful reference point, which is that Boulder is a reasonably small town. It’s 100,000 people, not including the college kids. It’s another 25,000 college kids. It’s a pretty small number of people, but it’s an extremely high concentration of computer science people and PhDs. I think the stat that gets thrown around is that on a per capita basis we’re no. 1 in both of those. That’s important because what happens is you get a very significant concentration of smart people who use technology in their day-to-day work and combined with a very independent personality. It’s a hippy town. My joke about Boulder is that the hippies ran out of gas on their way to the Bay Area and just said, “Eh, I’ll stay here, it’s pretty.” So you sort of have this very independent, high concentration of smart people, combined with sort of a sense that the integration of what you do in work and life is important.

What’s happening in Boulder’s entrepreneurial ecosystem that makes it sustainable?

I think one of the things that makes Boulder special is that you have this larger percentage of people willing to engage in the entrepreneurial community, and that integrate into their life very effectively, versus it becomes this thing that they do for a period of time and then need to go have a life, but still want to be in the same place. Those two things sort of work together.

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So, that’s thing one.

Thing two that I think is special is that there’s very little friction here. There’s no commutes; we’re living in a world where it doesn’t matter whether you’re sitting at your desk in your office, you’re sitting in your home, you’re sitting in a coffee shop, you can get work done. Especially with software and Internet-related things, you’re always connected, and as a result, the integration and probably the ability to sustain a level of intensity that’s required is higher.

There used to be a rap on Boulder that people didn’t work very hard. Five o’clock and you’re out on your mountain bike. The problem with that is, and it’s true in other cities that are really high quality of life cities. Yeah, you’re on your mountain bike from five to seven then you’re back at your desk and you’re back in front of your computer at eight and then you work until one in the morning. And you see it within the entrepreneurial strata. I mean, it is not bad to go out for a run in the middle of the day, or a bike ride–because everybody that’s in the entrepreneurial community is working their 12- to 15-hour day day in and day out. And they’re just not working between nine and five. They’re not organizing their day around the morning and evening commute, or whatever those bookends of the natural twelve-hour entrepreneurial day are.

So that’s a big part of it.

The last sort of Boulder differentiator, which I think is really important, is that because of the size of Boulder, it’s big enough to be interesting, but not so big to be overwhelming. It ends up being extremely collaborative place. We’re probably in our third or fourth generation of entrepreneurs here. The most interesting thing about this most recent wave is that first of all there are a lot of people who made a lot of money in the pre-bubble time frame. So you had a lot of successful entrepreneurs who made meaningful amounts of money. That’s important.

You have a lot of those entrepreneurs that had a success. Wasn’t necessarily their first company, but they had a success. And then, they had a failure between the 1998 and 2003 timeframe. So they started another thing or made some investments that got caught up in the bubble. So they had both a success and a failure in that time. So some set of those people started companies from 2004 forward. They were very mature entrepreneurs. They’re entrepreneurs that had success AND failure and understand what was required to both win and also were humble enough to recognize that you could lose. So you had that against a backdrop of, everybody here is at most two degrees of separation away from any other entrepreneur, because there’s only 100,000 of us, right? And that then is great because what you have is this easy access to everybody. And even though there’s competitive dynamics and occasionally friction, and there’s plenty of personalities. More generally, you tend to see that people try to help each other here, especially around the thing that I think is the generator of new entrepreneurial activity, which is young, first-time entrepreneurs.

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Does Boulder breed or attract entrepreneurs?

I think it’s some of both.

I think the core personality in Boulder is an entrepreneurial personality. It’s an independent, hippyish, smart, counterculture place. And those are more entrepreneurial than less entrepreneurial attributes. So I think you start with that.

I think you have an acceptance in this community of both independent thought, as well as a very high comfort level with ambiguity and failure. So if it’s not clear what you’re doing, you’re still very welcome here. And if you’ve had failure, you’re still very welcome here. So the environment is one that’s very comfortable with that.

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The other thing which is really useful is smart people attract smart people. Independent people attract other independent people. Progressive people tend to attractive other progressive people. So the entrepreneurial lifestyle tends to attract other entrepreneurs. And I’ve seen that over 15 years in a very reinforced way.

You said recently that good cities for entrepreneurial incubators have “good bones and a chip on its shoulder.” What did you mean by that?

They’re separable but both important. So the good bones concept is: You have to have smart people. You have to have an independent streak, or a culture of independence. You have to have a steady supply of new young people into the community. Because if you don’t, what happens is everybody gets older, has families, changes their priorities. And you have this stagnation until the younger people get sick of the older people not doing anything. So you need to sort of have this steady stream.

You have to have some relevant wealth. So, you know, whether it’s angel or VC investors, having people that have made money from things that are currently being started is important. If you have a bunch of people who made money in real estate, it’s gonna be really hard to build a tech community.

The chip on the shoulder is interesting. I mean, there’s only– The whole Silicon Valley phenomenon is so telling because many major and many minor cities in the country became “Silicon Something”–Silicon Prairie, silicon this, silicon that, Silicon Mountain, Silicon Rabbit, Silicon Elephant. Which is so ironic because silicon is a proxy now for software because Silicon Valley was started because of the chip companies, so it’s even a moniker that doesn’t quite work. The cities that have a little bit of a complex, like, “We can be better,” is a motive because that galvanizes people to action. And my comment consistently to people is not to be like Silicon Valley because you’re not gonna succeed at that. The goal is to be the best you can be of yourself. Learn as much as you can from Silicon Valley and other cultures, but if you’re Boulder, be the best Boulder you can be. If you’re Boston, be the best Boston you can be. So going back to the first comment , use your bones and build something meaningful on that. And then you have more opportunities. Versus so many companies that say here are the three things we’re gonna do: A, B, and C, and here’s our game plan. And that happens for a year or two and then everybody gets bored or they don’t work.

Is Boulder the right context for entrepreneurs with an eye on the kind of billion-dollar exits you see in Silicon Valley?

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I think that’s a population dynamic. I’m not a believer that you’re not gonna see billion-dollar exits here. I’ve had one. A company called Service Metrics, was bought for $280 million and by the time we got our hands on the stock after the deal closed it was worth well over a billion dollars. So, that was 1999. So you could say that’s a bubble exit so take it out of the equation. But Verio was a $5 billion sale, and that was a company that was created here. Not in Boulder, but in Denver, so in this region. The argument that there are none doesn’t work for me. On a percentage basis, I don’t know if it’s the same or not. But on an absolute basis, we have way less companies. Almost by definition it’s gonna be less. Oh, by the way, the vast majority of exits aren’t billion-dollar exits anyway. So it kind of comes back to, most software-Internet companies get acquired. We will have that play out here. That will continue to play out.

What does Boulder still need for the entrepreneurial ecosystem’s success?

I think there’s been a ton of energy by entrepreneurs in energizing Boulder in the last four or five years. And that has to continue. There’s no such thing as resting on your laurels. There’s no such thing as being complacent. The entrepreneurial beast is hungry. And if you want to have a great entrepreneurial ecosystem you have to keep feeding the entrepreneurial beast. And it has to be fed all up and down the chain, from some entrepreneurs who are young to experienced entrepreneurs, and they have to keep caring about the place they live in, their community, and the dynamics amongst them, the people in the community.

There’s not a thing we need, but that’s a thing I’d be fearful of. Not about Boulder specifically, but about in general. It’s easy to say, “Look how good we’re doing.” So what. That’s a good way to get to a place where you’re not doing so good.